Wage increase means price increase

By Kristen Garrett Calkins Media

Wednesday

Jun 13, 2007 at 12:01 AM

The increase in minimum wage could have a negative impact on your wallet now that employers will be shelling out higher pay. People who visit Kennywood Park each year may notice an increase in the entrance price this summer, for example. The gate price has gone up from $29 last season to $31 this season, mainly because of the increase in minimum wage, Kennywood spokeswoman Mary Lou Rosemeyer said.

The increase in minimum wage could have a negative impact on your wallet now that employers will be shelling out higher pay.

People who visit Kennywood Park each year may notice an increase in the entrance price this summer. The gate price has gone up from $29 last season to $31 this season, mainly because of the increase in minimum wage, Kennywood spokeswoman Mary Lou Rosemeyer said.

Rosemeyer said Kennywood employs 1,500 people during the open season, so the wage increase will cost the park quite a bit more. "We've been able to hold gate prices for the past four years, but this year, there was just no way around it," Rosemeyer said. She added that increases in utility and insurance costs also factored into the price increase.

Kennywood doesn't have to pay its employees minimum wage because the employees are seasonal, but Rosemeyer said the park pays employees at least minimum wage anyway. She said safety and guest enjoyment are their top priorities, and Kennywood wants the "best team members we can possibly have" to ensure that guests are safe and happy with their experience.

Mark Ondrusek, owner of Beaver Super in Beaver, said he has raised his prices across the board as a result of the minimum-wage increase. He said it's hard to quantify how much his prices have gone up because the increases vary from product to product.

Ondrusek said small businesses like his are "trying to compete with the big guys."

"Where do you think business owners get this money?" Ondrusek said. "That increase is going to cost me more in wages this year than what the store made last year."

Ondrusek said many employees making minimum wage are students, and he disagrees with the government telling him how much he can pay student workers. He expects the minimum-wage increase to have a "ripple effect" on the entire economy. "Everybody is suffering from this," he said.

According to a PNC Economic Outlook survey, 76 percent of owners of small and midsize businesses report that the minimum-wage increase will have little or no impact on their business, at least for the first six months of the increase. The main reason is that 72 percent of businesses report they already meet higher state minimum-wage requirements.

HOW MUCH FOR A PIZZA?

In October, the National Restaurant Association conducted a national survey of restaurateurs to gauge how they planned to deal with the upcoming minimum-wage increase, said Chrissy Shott, director of media relations for the association.

Nine out of 10 of quick-service operators said they would raise menu prices, while three of four family or casual dining operators said they would increase prices, Shott said. Some restaurateurs also said they would cut jobs or postpone plans to hire new employees to offset the minimum-wage increase.

Prices at the Vocelli Pizza restaurants in Beaver Falls and Rochester have increased. Assistant Manager Alison Kiger said everything on the menu went up by at least $1, and new menus were printed to reflect the price changes.

Kiger said customers were surprised, especially the regular customers who knew exactly how much their order was supposed to be. She said other Vocelli franchises have raised their prices even higher.

Vocelli's has also added a $1 delivery charge because gasoline prices are so high. Kiger said the extra charges often mean the drivers get smaller tips.

Cecil Smith, owner of the Dairy Queen in Rochester, said the increase in minimum wage, combined with rising gas prices, have driven up his costs, so he had to raise his prices.

Smith couldn't quantify how much his prices have increased.

"We try to hold our margins as low as possible to satisfy the needs of our customers," Smith said. He said most customers understand that he had to raise his prices and haven't complained.

IT'S HISTORY REPEATING

Raising menu prices to make up for paying employees more is nothing new.

When the minimum wage was last increased, in 1996 and 1997, the most common action by restaurateurs to offset the cost was to raise menu prices, Shott said.

A 1998 survey by the National Restaurant Association showed 42 percent of restaurateurs increased their prices, while 14 percent cut jobs and 15 percent said they would postpone adding employees.

In 1990, when the minimum wage rose from $3.35 an hour to $3.80, a restaurant association survey showed more than half of the food-service operators raised menu prices to offset costs.

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